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French business activity slows after terror attacks: PMI

Wed, Dec 16, 2015 - 4:10 PM

[PARIS] French business activity slowed to near-stagnation in December, with the services sector decelerating sharply following the Nov 13 attacks on Paris, according to the early results of a survey of corporate purchasing managers.

The Purchasing Managers Index (PMI) compiled by research firm Markit showed a marked slowing in the dominant services sector, dragging overall private sector business activity down despite an improvement in manufacturing.

The services sector PMI reading dropped to 50.0 in the early flash estimate for December from 51.0 in November.

With 50 the dividing line between growth and contraction, that suggested a 10-month expansion halted.

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The composite PMI index, which combines services and manufacturing, dipped to 50.3 in December from 51.0 a month earlier, even though the manufacturing sector survey reached a 21-month high. The flash PMI for manufacturing was 51.6 versus a November reading of 50.6, beating expectations. "Service providers indicated the slowest rise in new work since August, with some panellists citing an adverse impact following the recent terrorist attacks," Markit said.

The attacks have dented any sort of feelgood factor that might have been picking up," said Markit chief economist Chris Williamson. "Manufacturers, by contrast, noted the fastest increase in new orders for 21 months. New export orders received by manufacturers rose fractionally, following a decrease in the previous survey period, " Markit said.

The data suggested growth in French gross domestic product, the broadest measure of overall economic output, was likely to prove similar in the fourth quarter to the 0.3 per cent seen in the third quarter, Markit economist Jack Kennedy said.

France's central bank said on Dec 9 it had trimmed its fourth-quarter GDP forecast to 0.3 per cent from 0.4, partly because of the hit to hotels and restaurants from the attacks in which 130 were killed by Islamist gunmen and suicide bombers.